CQ WEEKLY – COVER STORY
Aug. 4, 2012 – 11:50 a.m.
This Game Is Far From Over
By John Cranford, CQ Staff
Make no mistake: When lawmakers voted last August to create the ultimate political weapon — a nine-year, $1.2 trillion program of automatic spending cuts — few expected they would still be swinging that cudgel today, using it to pound on each other to win favor with voters.
That club, known by now to most any C-SPAN viewer or newspaper reader as “the looming sequester,” was intended to force Congress to take serious actions last fall to curtail growth in the federal debt. The threat of uncontrollable, across-the-board percentage cuts in virtually every federal discretionary spending account (plus limited cuts in a few mandatory programs) was supposed to be frightening enough to bring recalcitrant lawmakers to the negotiating table.
Democrats were supposed to be convinced that carefully crafted, targeted reductions in spending would be preferable to the sequester’s meat ax. Republicans were supposed to fear undisciplined defense cuts far more than negotiated tax increases.
It didn’t work out that way. A year later it looks as if the dreaded sequester will actually take effect. Absent some last-minute move by Congress to stop it, the White House Office of Management and Budget next Jan. 2 will order $109 billion in spending cuts for the coming fiscal year.
As Acting OMB Director Jeff Zients explained to the House Armed Services Committee last week, his agency is already making plans. “I want to emphasize that the law provides OMB and agencies with very little flexibility or discretion in implementing sequestration,” Zients told lawmakers. “No amount of planning will mitigate the damaging effects of sequestration. Sequestration is a blunt, indiscriminate instrument.”
It’s very possible, though, that Zients is downplaying in his public comments the ways in which he and other government officials might be able to mitigate the “blunt” effects of the sequester, or to delay them. Outside experts — including former top White House budget officials — say the Pentagon, OMB and lawmakers have options they aren’t discussing. Those options might be used to make the sequester less onerous or to buy time to find an alternative.
Whether lawmakers want to find an alternative is another matter. The sequester lost its deterrent value long before the special joint committee created to reach a hoped-for budget deal threw in the towel last Thanksgiving. So, today, lawmakers, pundits and even the president of the United States are wringing their hands over the automatic cuts and pointing fingers of blame over the impasse that has allowed the process to get this far.
In an exchange of testy letters last week, House Speaker
“We passed it reluctantly, at your urging, after receiving a commitment that the president and the Democratic leadership in the Senate would work with Republicans to avert the sequester by enacting a deficit reduction package built on pro-growth tax reform and much-needed changes to strengthen and stabilize our entitlement programs,” wrote Ohio Republican Boehner to Reid. “The president and Senate Democrats failed to make good on this commitment.”
The Senate leader was having none of it. “It is shocking that Republicans now want to renounce the spending cuts required by sequestration, without the balanced deficit reduction it was designed to produce,” replied Nevada Democrat Reid. “This would be fiscally irresponsible. It would be more irresponsible, even immoral, to abandon deficit reduction while handing out more tax breaks for the super-rich.”
This thrust and parry of familiar party rhetoric is focused as much on the issue of tax policy as it is on spending cuts. Whether and how to increase revenue remains the real source of impasse, and that’s why no one expects real negotiations to occur before Nov. 6 — it’s too easy to swing the sequester club and hope to bloody the other guy. Control of the government for the next two, four or more years is at stake in this struggle, and neither party wants to disarm.
More significant, few expect an agreement to block or ameliorate the sequester even in the immediate aftermath of the election, because positions are so entrenched. Increasingly the betting favors the impasse persisting at least into early next year, with the sequester being allowed to take effect, if only for a short time — when the public might wake up to the consequences and demand action.
There is a very real chance that some of the dire predictions are overstated, and some may even be underplayed.
This Game Is Far From Over
The weeks leading up to the election may bring additional clarity on the consequences of sequester and the mitigating steps the government could take. In late July, by overwhelming votes in the House and the Senate, Congress passed a bill to require a report within 30 days of enactment explaining the effects of the automatic cuts.
President Obama is expected to sign the bill. But it’s possible that the required detailed report on the sequester will only add spikes to the club head, making it a more potent weapon and doing little to encourage lawmakers to change the automatic cuts before they take effect. In other words, this political game has a long way to go before it plays out.
It’s possible, for example, that the Pentagon may have more options available than most people think to shift spending and protect critical accounts from the automatic cuts. The same goes for the executive branch, which can exercise the power embodied in OMB’s middle name, “Management,” to apportion spending throughout the year in order to delay the sequester and give Congress additional time to find alternatives. In health care, though, the conventional wisdom that the effects of a limited sequester could minimize the consequences is also turned on its head: There is real potential for more serious consequences than most have predicted to date.